Tuesday, February 3, 2009

News of the Day… (or why Horton doesn’t really hear a who)

(Or why Nate's still looking for inflation)

Ahhh, the markets are up, it’s a beautiful day – Spring right around the corner, the children at play. What’s that you hear, Horton, my dear boy? Tears that can’t be – investors never cry, all they have to do is buy! Just have HOPE there old mate, close your eyes and you’ll see, soon you’ll have butterflies and ponies, just like Katie!



Meanwhile, back in the “real” world…

Tom Daschle withdrew his Cabinet post nomination, too bad there are so many tax cheats in Washington, who would’ve guessed? What’s really too bad is that just yesterday President Obama was standing full-force behind him. Is that change? Because that sounds like the same old shit to me. Actions, Mr. President, actions.

Auto sales are worst in 26 years

January sales tumble more than expected at GM, Ford and Toyota as rental car companies slash purchases.

By Chris Isidore, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- Auto sales tumbled even more than expected in January to their worst levels since at least 1982, as a pullback in purchases by rental car companies became the latest problem for the troubled industry.

General Motors (GM, Fortune 500) reported that its sales plunged 49% from a year ago. Ford Motor (F, Fortune 500) said sales fell 39% at its Ford, Lincoln and Mercury brands, and 40% overall when including sales at Volvo, which Ford is trying to sell. Chrysler LLC reported a 55% drop in sales.

But it wasn't just the U.S. automakers reporting sharply lower sales. Toyota Motor (TM) reported a 32% decrease in its U.S. sales, while sales at Honda Motor (HMC) tumbled 28%. Nissan (NSANY) sales fell 30%.
Ouch! Gee, that 55% drop in sales is going to leave mark. Just another example of a bubble going POP… once they have been pricked, they cannot be stopped. At the very least, I certainly don’t see any signs of inflation in that data, do you?

Okay, well let’s see how the housing market is looking, shall we?
U.S. Property Owners Lost $3.3 Trillion in Home Value

By Dan Levy

Feb. 3 (Bloomberg) -- The U.S. housing market lost $3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes were worth as the economy went into recession, Zillow.com said.

The median estimated home price declined 11.6 percent in 2008 to $192,119 and homeowners lost $1.4 trillion in value in the fourth quarter alone, the Seattle-based real estate data service said in a report today.

“It’s like a runaway train gaining momentum,” Stan Humphries, Zillow’s vice president of data and analytics, said in an interview. “It’s difficult to say when we’ll see a bottom to the housing market.”

The U.S. economy shrank the most in the fourth quarter since 1982, contracting at a 3.8 percent annual pace, the Commerce Department said Jan. 30. Record foreclosures have pushed down prices as unemployment rose. More than 2.3 million properties got a default or auction notice or were seized by lenders last year, according to RealtyTrac Inc., a seller of data on defaults.

About $6.1 trillion of value has been lost since the housing market peaked in the second quarter of 2006 and last year’s decline was almost triple the $1.3 trillion lost in 2007, Zillow said.

Values have dropped for eight straight quarters. They fell in Manhattan for the first time since Zillow began including the New York City borough in its records two years ago.

Manhattan Declines
Manhattan’s estimated median price dropped 5.8 percent to $914,544. Seattle and Portland, Oregon, values tumbled 12.1 percent and 11.7 percent, respectively, the first time those cities dropped more than the nation, Zillow said.

Greenwich, Connecticut fell 5.8 percent to $1.5 million and Brooklyn, New York, declined 2.3 percent to $504,652.

More than 2.6 million U.S. jobs were cut in 2008 and the unemployment rate rose to 7.2 percent in December, the highest in almost 16 years, the Labor Department said.
“A witch’s brew of economic insecurity, foreclosures and tightened lending standards are helping to keep hard-hit markets down and to widen the scope of markets showing declines,” Humphries said in a statement accompanying the report.

The number of homeowners with negative equity, or those who owed more on their homes than the property was worth, rose to 17.6 percent from 14.3 percent in the third quarter, Zillow said. The company began its quarterly reports in 2006.

More Foreclosures
“Negative equity will trigger new foreclosures, and that will add to inventory and depress prices,” Humphries said.
Naw… Really, do ya think?

Ummm… $6.1 TRILLION lost? Just in residential real estate? Add that to the more than $8 trillion lost in the U.S. stock market and we’re talking about some real wealth there. That doesn’t even consider commercial real estate or any of the other credit losses. Heck, just that $14 trillion kind of makes that $700 TARP look like a little like a Kleenex blowing out in the Katrina wind. A choo! Excuse me… “But what happened to all that wealth,” you ask? Well, all that “wealth” returned to the place from which it came – the ether!


So, what do you think about that ramp in base money supply? Think it’s going to overcome the power of Katrina? Think Obama is going to put on his cape and take to the air like SuperBama? I don’t really think so, I’m still having problems seeing inflation in that data. Perhaps if we keep looking around, we’ll find some inflation?

Well, maybe he can produce some willing buyers for these homes:
Record 19 Million U.S. Homes Stood Vacant in 2008

By Kathleen M. Howley

Feb. 3 (Bloomberg) -- A record 19 million U.S. homes stood empty at the end of 2008 and homeownership fell to an eight-year low as banks seized homes faster than they could sell them.
The number of vacant homes climbed 6.7 percent in the fourth quarter from the same period a year ago, the U.S. Census Bureau said in a report today. The share of empty homes that are for sale rose to 2.9 percent, the most in data that goes back to 1956. The homeownership rate fell to 67.5 percent, matching the rate in the first quarter of 2001.

The worst U.S. housing slump since the Great Depression is deepening as foreclosures drain value from neighboring homes and make it more likely owners will walk away from properties worth less than their mortgages. About a third of owners whose home values drop 20 percent or more below their loan principal will “hand the keys back to the bank,” said Norm Miller, director of real estate programs for the School of Business Administration at the University of San Diego.

“When you’re underwater and prices continue to fall, you tend to walk,” Miller said in an interview. “It’s a downward spiral that’s tough to stop because it feeds on itself. Foreclosures encourage other foreclosures and falling prices discourage buying.”

Obama’s Plans
The figures demonstrate the intensity of the U.S. housing crisis as President Barack Obama considers ways to help homeowners.

The Obama administration is considering government guarantees for home loans modified by their servicers, seeking to stem the record surge of foreclosures that’s hammering U.S. property values.

The proposal, which may also have taxpayers share in the cost of reducing mortgage payments, is aimed at shielding lenders from default after they loosen loan terms for struggling borrowers. Comptroller of the Currency John Dugan, who regulates national banks, said yesterday that “working out the details of it is still something that’s ongoing.”
Congress and the new president are grappling with how to repair the housing market as the recession enters its second year and unemployment rises. The U.S. economy shrank the most in the fourth quarter since 1982, contracting at a 3.8 percent annual pace, the Commerce Department said on Jan. 30.

Legal Wrangling
The U.S. had 130.8 million housing units in the fourth quarter, including 2.23 million empty homes that were for sale, the Census report said. The vacancy rate was 3.5 percent in urban areas and 2.6 percent in suburbs, the report said.

In addition, the report counted 4.1 million vacant homes for rent and 4.8 million seasonal properties.

Bank Holdings
There were 2.22 million new foreclosures in 2008, an average of 6,090 a day, according to Washington-based Hope Now Alliance. Those resulted in 917,000 property sales, according to the group that represents 27 mortgage lenders and servicers.

U.S. banks owned $11.5 billion of homes they seized from delinquent borrowers at the end of the third quarter, according to the Federal Deposit Insurance Corp. in Washington. That’s up from $5.4 billion a year ago.

The U.S. housing market lost $3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes were worth as the economy went into recession, Zillow.com said in a report today.

The median estimated home price declined 11.6 percent in 2008 to $192,119 and homeowners lost $1.4 trillion in value in the fourth quarter alone, the Seattle-based real estate data service said.
Anyone else see some potential homeless shelters?

“The proposal, which may also have taxpayers share in the cost of reducing mortgage payments…” Really? Is it just me or is this just more of the same old circular Ponzi B.S. that got us into this mess to begin with?

Sure, take more money from the taxpayers to give back to the taxpayers so that they can keep their overinflated house. That sounds like change I can believe in. I guess there’s always HOPE to fall back on.

I’d like to be positive, Mr. Obama, I really would. But so far I’m not really seeing change – I’m seeing more socialism and lip service than real action.

How’s that? Why not let the market do its thing and clear out all the bad debt? How about not appointing any more tax cheats to your Cabinet? How about putting some of the outright criminals behind bar? How about the government separate itself totally from corporate influence just like it does from religion? How about the government stop trying to convince people to spend money they do not possess? How about we stop trying to defy mathematics by thinking we can create never ending growth? How about we put an end to speculative derivatives and create legitimate markets for the few that have legitimate purposes? How about we return the central banking function to the people? How about we take control of the digital money process and return that to the people so that the base of our money isn’t eaten away by fees and interest? How about we get to work building a stable economic platform that will last for more than a few years, and get to work building an environment that will spur innovation and real, lasting employment that will live on for generations? Lip service is one thing, meaningful change via actions is another.

After all, money, and all that goes with it, are merely inventions of the PEOPLE. It is there to provide a medium of exchange – for the PEOPLE, not for the central bankers.

Now, I know that I’m probably asking for a little much at this juncture, you see I just don’t think people are convinced – I mean truly convinced – about how much larger this bubble is than any government attempt could possibly get. They see that the DOW (oh wow) went up 141 points today and they hear the pundits on CNBS talking about increasing money supplies and they are all excited, believing in change and thinking that like Horton, who hears a who, that they see inflation just around the corner.

What’s that I hear? Me, I’ll trust in the math. I’ll leave it up to you to believe, like Horton, in the who. Just make sure it’s not your money being flushed like a pile of banker doo!



Okay, that was really tacky! How if we just say that some times it’s better to be grounded in reality than dreams?

Gary Wright - Dream Weaver: